Businesses are in a constant battle to design effective cost-containment strategies. In 2016, direct premiums written for workers’ compensation insurance reached a record $58.5 billion. Business executives are increasingly turning to claims management services for workers’ compensation policies as an area to control costs.
Executives should be diligent when choosing a workers’ compensation provider and program. Options range from guaranteed cost plans to retrospective rating and large deductible programs.
“The biggest difference between these plans has to do with risk transference,” says Steve Goldman, Assistant Vice President of Sales/Policyholder Services at NJM Insurance Group. “With a guaranteed cost policy, your risks are transferred to the carrier in return for a premium. If you’re willing to ‘throw a little skin in the game,’ other options– such as switching to a third-party administrator (TPA) model or self-insuring –can reduce costs.”
There are many factors to consider when moving away from a guaranteed cost policy. When deciding if it’s a viable option, companies should conduct a self-assessment that takes a look at past and present workers’ compensation claims activity and safety.
As part of the self-assessment, executives should ask the following questions:
- Does my company have a strong safety program in place?
- Does our safety program have a track record of proven success over time?
- How does our claims history compare to other businesses in our industry?
- Have we created a safety-first mindset within our employees?
- Are we able to fund and pay claims for any retention programs?
If the answer to all these questions is yes, it may be worth exploring making the switch to self-insuring.
For companies that self-insure for workers’ compensation, an effective way to reduce costs is to partner with an experienced TPA.
Choosing the correct TPA can help your company avoid wasting time, money and resources on a partnership that will not provide the expected benefits. For example, NJM’s TPA program gives companies the flexibility to choose the services they want at a cost that fits their budget. Some of the criteria companies should consider when choosing a TPA include:
- Effective claim and medical management
- A broad medical network to treat injured employees
- Timely disposition of claim issues
- Return-to-work programs
- Communication and transparency throughout the claims process
- Legal services protecting your interests
- Loss prevention services to mitigate safety hazards
- Fraud prevention measures
There are many options for companies to insure themselves and their employees. Keeping staff care top of mind will ensure success, now and in the future.